II 110th CONGRESS 1st Session S. 2199 IN THE SENATE OF THE UNITED STATES October 18, 2007 Mr. Kerry introduced the following bill; which was read twice and referred to the Committee on Finance A BILL To amend the Internal Revenue Code of 1986 to provide for the treatment of certain foreign nonqualified deferred compensation.

1.

Short title

This Act may be cited as the Offshore Deferred Compensation Reform Act of 2007.

2.

Special rule for certain foreign nonqualified deferred compensation

(a)

In general

Subpart B of part II of subchapter E of chapter 1 of the Internal Revenue Code of 1986 (relating to taxable year for which items of gross income included) is amended by inserting after section 457 the following new section:

457A.

Certain foreign nonqualified deferred compensation

(a)

In general

Any compensation which is deferred under a nonqualified deferred compensation plan (within the meaning of section 409A(d)) of a nonqualified foreign corporation is includible in gross income for purposes of this chapter when there is no substantial risk of forfeiture of the rights to such amount. (b)

Nonqualified foreign corporation

For purposes of this section, the term nonqualified foreign corporation means any foreign corporation unless substantially all of the income of such corporation— (1)is effectively connected with the conduct of a trade or business in the United States, or (2)is subject to an income tax imposed by a foreign country, but only if— (A)(i)such corporation is eligible for benefits of a comprehensive income tax treaty which such country has with the United States which the Secretary determines is satisfactory for purposes of this section and which includes an exchange of information program, or (ii)the Secretary determines that such income tax is a comprehensive income tax satisfactory for purposes of this section, and (B)a deduction is allowed for compensation described in subsection (a) under rules substantially similar to the rules of this title. (c)

Application of certain rules

Rules similar to the rules of paragraphs (4), (5), and (6) of section 409A(d) shall apply for purposes of this section. (d)

Regulations

The Secretary shall prescribe such regulations as may be necessary or appropriate to carry out the purposes of this section, including regulations disregarding a substantial risk of forfeiture in cases where necessary to carry out the purposes of this section.

. (b)

Clerical amendment

The table of sections of subpart B of part II of subchapter E of chapter 1 of such Code is amended by inserting after the item relating to section 457 the following new item: Sec. 457A. Certain foreign nonqualified deferred compensation. . (c)

Effective date

(1)

In general

The amendments made by this section shall apply to amounts deferred in taxable years beginning after December 31, 2007. (2)

Earnings

The amendments made by this section shall apply to earnings on deferred compensation only to the extent that such amendments apply to such compensation.